June 19, 2024

Styles Of Leadership

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Daniel Ek dashes ‘magical’ CEO illusions and says he’s ‘probably the least powerful person at Spotify’ thanks to Scandinavian leadership model

4 min read

In the high-stakes world of corporate leadership, Spotify CEO Daniel Ek may seem to occupy one of the most coveted positions—that of a founder CEO.

Traditionally, these figures assume a quasi-royal role in steering their companies, leveraging their almost mythical status as founders to make bold decisions and commanding the voting power to enforce their leadership.

On the surface, it’s easy to slot Ek into this category, given his instrumental role in elevating the company from a little-known Swedish entity to the world’s preeminent music streaming platform over 18 years.

But according to the Spotify boss, that couldn’t be further from the truth.

What is the Scandinavian leadership model?

Speaking at a live recording of the In Good Company podcast in Oslo earlier this month, Ek said he was often forced to correct people when they came to him with requests about the company.

“I often hear the phrase ‘you should go directly to the CEO’… where a lot of people think that you’re magically going to be able to enact some kind of decision,” Ek said.

The Spotify boss said there were examples of companies where the CEO did have ultimate control, namedropping Tesla’s Elon Musk.

But Ek, who according to the group’s last annual financial statement is also Spotify’s largest shareholder, says this is not the case at his streaming group thanks to the Swedish labor model his company employs.

“It’s more the Scandinavian leadership model, where you delegate decision-making, you allow your leaders to make it. So, in many ways, I’m probably the least powerful person in Spotify and I probably make the least amount of decisions in Spotify.”

Instead of hyping up the cult of the leader, Ek instead sought to highlight the work of assistants, who he said are usually overlooked.

“Almost all powerful people have assistants of some kind and they are the ones who decide who this person is meeting or not meeting and can really help shape whatever happens in that person’s day,” Ek said.

The Scandinavian model of leadership encourages a flat style of management where employees are encouraged to take their own decisions and bosses often delegate tasks.

Spotify tries to instill several Scandinavian-inspired working models for its employees. The group has a generous parental leave policy and emphasizes flexibility for its staff with a work-from-anywhere policy.

However, based on the company’s latest filings, Ek’s comments on installing a Scandinavian style of leadership sound more like management rhetoric than being reflective of how Spotify operates in practice.

In addition to being the group’s biggest shareholder, Ek has the second-highest voting power at Spotify behind fellow co-founder Martin Lorentzon. The pair control a combined 74% of the company’s boardroom votes.

A representative for Spotify declined to comment further on Ek’s remarks.

Ek facing Spotify challenge

Still, Ek might have good reason to distance himself from the perception that he has carte blanche to enact his vision at Spotify.

The streaming giant announced its biggest-ever round of layoffs in December, saying goodbye to 1,500 staffers, equivalent to 17% of the group’s workforce.

The CEO disclosed that the company was doing too much “work around the work” and suggested the layoffs would bring efficiency back to the company.

Not long after, Spotify announced CFO Paul Vogel would be departing. Vogel cashed in $9 million worth of stock in the wake of layoffs that helped the company’s share price soar.

Those layoffs and the departure of Vogel came after the company made long-term bets that didn’t fully pay off.

Spotify splashed more than $1 billion on its podcast division with big deals for the likes of Barack and Michelle Obama, and Prince Harry and Meghan.

They have since chosen not to renew deals with some of its major stars, with Ek saying the group would be “very diligent” about future big-money content deals.

While Spotify says those deals intended to bring in long-term podcast listeners before switching to investment in higher-margin podcasts, it has made the group’s quest for consistent profitability a long one.

A third-quarter operating profit last year of €32 million ($34.5 million) was the company’s first since 2021. The company has fought with high costs since its inception linked to pricey deals with record labels to acquire streaming rights.

However, there are signs Spotify is beginning to turn the ship around.

While shares are still well below their 2021 peak, the group has doubled in value in the last 12 months as the group managed to push through an increase to its subscription price.

Spotify announced an update to its royalties model that would help funnel $1 billion to “legitimate artists,” as the company looks for ways to placate performers who are becoming increasingly frustrated with the group’s revenue distribution model.

This story was originally featured on Fortune.com


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